Cuba Reopened

Obama and the Castro regime in Cuba have recently begun talks about ending the trade embargo between the two countries, arguing that it is archaic and that both sides could benefit from a new trade agreement. Although Cuba is a communist state, something that Castro is not willing to change, Cuba still presents opportunity from an economic standpoint. Cuba is a country stuck in the 1960s (the embargo was put in place in 1961) that desperately needs new infrastructure. Because sanctions are Congress’s most powerful tool, it has proven to be hard for Obama to simply remove the embargo completely. Instead, the Obama administration has had to propose ideas to Congress and remove sanctions regarding Cuba one at a time.

Recently Obama proposed a few rule changes to Congress, which capture his eagerness to take advantage of the economic opportunities Cuba has to offer. He proposed that the United States be allowed to export building materials, agricultural equipment, and telecommunication equipment. In addition to those requests, he also asked Congress to allow the United States to import Cuban cigars and rum.

This is definitely a step in the right direction. However, the U.S. government has to remember that although Cuba is anxious to renew ties with the United States, there may also be some skepticism associated with a new trade agreement, as the United States’ ultimate goal is obviously to transform the Cuban government into a democracy. When Castro made a speech outlining his demands of the United States at the Community of Latin American and Caribbean States summit, he stated that before a new agreement was reached, the United States must: return Guantanamo Bay and pay reparations for all of the economic distress caused by the embargo.  Some of this may be fair, but the United States does not have too much to gain economically from Cuba, which has a GDP about the size of West Virginia. Thus, Cuba will probably end up conceding to any requests made by the United States.

Although the economic benefits for U.S. corporations in Cuba are relatively small compared to size of the U.S. economy, there is still some upside for certain sectors and regions. For example, at the port of Baton Rouge, there is expected to be a major economic impact benefitting the state of Louisiana due to the amount of wheat Cuba will potentially import. Since Cuba usually has to get its wheat from a distant source, the close proximity of Baton Rouge promises lower prices and efficient trading for Cubans. Also, with the increase in ships coming in and out of the port, Louisiana Commissioner of Agriculture and Forestry, Mike Strain, says, “docking fees and the purchase of groceries and supplies while the ships are docked in Baton Rouge will have an economic impact of $1 million annually.”

Some commentators say that although Cuba seems like it is a goldmine for corporations considering it has been shut off from the biggest superpower in the world since 1961, the only thing U.S. corporations will find there is fool’s gold. The excitement about taking advantage of the new Cuban market is simply a front behind which the U.S. government will begin to chip away at the Communist regime in Cuba. The last attempt to dethrone the Castro regime was when the United States slapped the trade embargo on Cuba, which obviously didn’t work. Now it is up to the “economic promise” Cuba provides, for the United States to start instilling the wonders of democracy in the minds of the Cubans.